The fifth and final internet business model to be considered in this series of articles is the advertising support business model. This model depends on advertisers or sponsors paying to have their adverts (in whatever form they appear) located on your internet content.
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An intermediary internet business model is one which (although there are some variants) does not itself provide content but which aggregates or links together content provided by others people or organizations. A search engine such as Google or Yahoo might be said to be an intermediate model, because they provide lists of content for users who are interested in a particular subject or issue but do not produce that content themselves.
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The affiliate business model for the internet relies upon having one website or webpage encourage reader to move to another website and, it is hoped, purchase items available there. This is a common phenomenon and one that is often only semi-visible.
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In the modern business world, it is inevitable that most entrepreneurs will spend a lot of time using the internet. There are many reasons for using the internet: searching for customers, burnishing the personal brand, establishing relationships with stakeholders, developing new products and so forth (entrepreneurs would never do anything as unproductive as simply surfing around without a wider purpose).
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While it would be great if we could all have active and creative imaginations capable of coming up with all kinds of wonderful new ideas, most of us do not have such capability. Fortunately, in the case of entrepreneurs, we do not need to have all of that creativity. This is because most successful entrepreneurs do not rely on brilliant new inventions to become successful – in fact, most entrepreneurs tend to be suspicious of genuinely new ideas because they have not been tested in the market and may require extensive expenditure on research and development, educating the public and establishing new channels of distribution before any kind of profit can even be sought.
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I wrote at the start of this series of articles that the business model represents one of the best frameworks for entrepreneurs to use to think about how they are planning to make profit and the extent to which this is feasible. It is necessary, of course, to think holistically and in a comprehensive manner.
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The sixth and final component part of the business model is competitive strategy. In common with the other components, competitive strategy cannot really be treated in isolation from the other parts of the model but, nevertheless, this article will try to consider it on its own.
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It is rare in contemporary business to offer an added-value product in isolation from any other product offerings. It is much more likely that an entrepreneur is seeking to supply a product that is incorporated into a wider offering or else is offered in a setting that is part of an experience that is also marketed. One product in a shop, for example, is necessarily part of the retail experience provided by that shop or chain of shops and is subject to the additional effects of shopping there.
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The fourth component part of the business model concerns revenue generation and margins. This is of course particularly important since a business that does not capture enough revenue is going to be a bankrupt ex-business in due course. As the name suggests, there are two aspects to this part: generating the revenue in different methods and also determining the extent of any profits that should be sought.
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The third component part of the business model is the value chain structure. This phrase has three words, evidently, and each adds some meaning to the overall concept. The first is ‘value’ and this has also been seen in the ‘value proposition,’ which was the main feature of the previous article. It represents the reason why a customer would pay the premium price that separates the product from commodity status.
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